Cisco Posts a Record $18.5 Billion Quarter, Its Fastest Growth in 15 Years

Cisco took in $18.5 billion in the three months to 24 October, 24% more than a year earlier and a quarterly record. Most of the jump came from one business: networking, up 43%, as the companies building AI data centers buy the switches and routers that tie thousands of chips together. On Thursday Cisco raised its forecast for the year, and its chief executive said the company is in the very early stages of a multi-year networking supercycle.

Networking Up 43%, the Engine of the Quarter

Product revenue rose 32% while services grew 1%, and inside products one line did the heavy lifting. Networking grew 43%, against 7% for security, 8% for collaboration and 2% for observability. Every region grew by double digits: the Americas by 28%, Europe, the Middle East and Africa by 18% and Asia-Pacific by 21%.

The reason is how AI is built. A training cluster is thousands of chips that have to swap results with each other constantly, and the network between them decides how much of their time goes to computing rather than waiting. Every new AI data center needs that fabric, and Cisco sells it.

The profits grew faster than the sales. GAAP net income rose 59% to $4.6 billion, GAAP earnings per share rose 58% to $1.14 and non-GAAP earnings per share rose 40% to $1.40. The non-GAAP operating margin reached a record 37.8%. The more telling number, though, is the one Cisco has been revising all year.

From $4 Billion to $9 Billion of AI Revenue

In fiscal 2026, Cisco booked about $4 billion of AI infrastructure revenue from hyperscalers, the cloud giants building the largest AI clusters. In August it told investors to expect $7.5 billion this fiscal year. Three months later it has raised that again.

That is more than double last year's total, and it pulls the whole forecast up with it. Cisco now expects fiscal 2027 revenue of $74.8 billion to $75.8 billion, up from the $72.2 billion to $73.4 billion it guided in August, and non-GAAP earnings per share of $5.47 to $5.53. For the current quarter it guides to revenue of $18.0 billion to $18.2 billion.

The hardware mix has a cost. GAAP gross margin slipped to 63.7% from 65.5% a year earlier. Chief financial officer Mark Patterson pointed to the other side of the ledger: operating expenses fell 3% on a GAAP basis, so each extra dollar of sales is carrying more profit, which is why earnings are growing faster than revenue.

$3.7 Billion Back to Shareholders

Operating cash flow rose 36% to $4.4 billion, and Cisco returned $3.7 billion to shareholders in the quarter: $1.7 billion in dividends and $2.0 billion to buy back about 18 million shares at an average of $112.38. It declared another quarterly dividend of $0.42 per share, payable on 20 January 2027. Remaining performance obligations, contracted revenue not yet recognised, rose 8% to $46.2 billion.

“We are in the very early stages of a multi-year networking supercycle, and we're confident in our ability to continue capturing the multi-billion-dollar opportunity it represents for Cisco.”— Chuck Robbins, Cisco chair and CEO

For most of the last decade Cisco was valued as a steady, slow-growing incumbent. This quarter it grew like a company at the centre of the buildout, because it is: the GPUs in an AI data center have to talk to each other constantly, and the cables and switches that let them do it are turning a networking company founded in 1984 into one of the AI boom's quieter winners.